Well it doesn't see the USB optical drive at startup either. Since it does not start up with a OSX install CD, whether there is a HD installed or not, doesn't that indicate something other than a HD problem?
I think my next step is to see if I can get my hands on a working iBook to compare things with. Hopefully, that will help me zero in on the problem.
I really do appreciate the help, and will post back if I learn anything useful.
Thanks.....Ron